PREHEAT oven to 350ºF. Beat cream cheese, butter and granulated sugar in large bowl with electric mixer on medium speed until well blended. Separate 1 of the eggs; set egg white aside for later use. Add yolk, second (whole) egg and vanilla to cream cheese mixture; mix well. Gradually add combined flour and baking powder, beating until well blended after each addition
DIVIDE dough into four equal pieces. Roll each piece into 12x1-inch log; place, 2 inches apart, on large ungreased baking sheet. Use handle of wooden spoon or fingers to make depression down length of each log, about 1/2 inch wide and 1/2 inch deep. Beat reserved egg white with fork; brush over dough. Sprinkle with walnuts. Fill depressions with preserves, using about 3 Tbsp. preserves in each log.
BAKE 25 to 27 min. or until edges are lightly browned. Transfer to wire racks; cool slightly. Sprinkle with powdered sugar. Cut each log into 12 diagonal slices
NOTE : Butter is the preferred choice in this recipe for true buttery flavor, but you can also prepare the recipe with margarine. Stock up when butter is on sale and freeze it in its original carton placed in a freezer-weight resealable bag for up to 4 months.